SEC Filings

S-4/A
TIME WARNER INC. filed this Form S-4/A on 03/24/2000
Entire Document
 
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   Cash Payment in Respect of the Option. Under each of the stock option
agreements, the optionholder has the right, at any time after the option has
become exercisable, to elect to receive a cash payment in an amount equal to
the product of:
 
   (x) the difference between:
 
      .  the higher of:
 
      .  the highest price per share proposed to be paid by any other
         person in connection with any Acquisition Proposal; and
 
      .  the highest closing price of the stock during the six-month
         period immediately preceding the date on which the optionholder
         gives notice of the election to receive cash; and
 
      .  the exercise price; multiplied by
 
   (y) the number of shares of the issuer's common stock designated by the
optionholder.
 
   Profit Limitations. The Time Warner stock option agreement provides that in
no event will America Online's total profit under the Time Warner stock option
agreement, plus any termination fee paid by Time Warner under the merger
agreement, exceed in the aggregate, an amount equal to 2.75% of the product of:
     
  .  the number of shares of Time Warner's common stock outstanding as of
     January 10, 2000, the date of each stock option agreement, calculated as
     described above for termination fees under the merger agreement;
     multiplied by     
 
  .  1.5; multiplied by
 
  .  the last sale price of America Online's common stock on the New York
     Stock Exchange on January 7, 2000.
 
   Similarly, the America Online stock option agreement provides that in no
event will Time Warner's total profit under the America Online stock option
agreement, plus any termination fee paid by America Online under the merger
agreement, exceed in the aggregate an amount equal to 2.75% of the product of:
     
  .  the number of shares of America Online's common stock outstanding as of
     January 10, 2000, the date of each stock option agreement, calculated as
     described above for termination fees under the merger agreement;
     multiplied by     
 
  .  the last sale price of America Online's common stock on the New York
     Stock Exchange on January 7, 2000.
 
   If the total profit that would otherwise be received by the optionholder
exceeds the maximum amount permissible, the optionholder must, in its sole
discretion:
 
  .  reduce the number of shares subject to the stock option agreement;
 
  .  deliver to the issuer for cancellation shares previously purchased;
 
  .  reduce the amount to be paid by the optionholder;
 
  .  pay cash to the issuer of the option; or
 
  .  take any combination of these actions, so that its total profit does not
     exceed the maximum amount.
 
   Registration Rights and Listing. Each of the stock option agreements
provides that the optionholder has specified rights to require the issuer to
register, under the Securities Act of 1933 and any applicable state law, all
shares purchased by the optionholder pursuant to the stock option agreement.
Each of the stock option agreements also provides that the optionholder has
specified rights to require that the issuer list the shares purchased by the
optionholder pursuant to the stock option agreement on the New York Stock
Exchange or other national securities exchange or trading system on which
shares of the issuer's common stock are listed for trading or quotation.
 
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